Snap sinks to IPO price for first time since market debut

SAN FRANCISCO: Shares of Snap Incdropped 4.9 percent on Thursday to their initial publicoffering price, highlighting investors' loss of confidence inthe social media company that faces fierce competition fromFacebook.

The owner of Snapchat - a mobile app that lets users capturevideo and pictures that self-destruct after a few seconds -ended at $17.00, the price set in its March initial publicoffering that was the hottest U.S. technology listing in years.

Snap climbed to $29.44 in the days immediately after itsmarket debut but has since declined. Thursday's price was thelowest since the IPO and it did not sink below $17.00.

Snapchat is popular among people under 30 who enjoy applyingbunny faces and vomiting rainbows onto their pictures. But manyon Wall Street are critical of its high valuation and slowinguser growth. Snap has warned it may never become profitable.

Those worries increased after Snap's first quarterly reportin May showed declining revenue expansion, disappointinginvestors who had hoped the company would surprise them with bignumbers.

Dipping below an IPO price is seen on Wall Street as asetback to be avoided by chief executives and theirunderwriters, but it is not uncommon for Silicon Valleycompanies whose market listings have been hyped to investors.Alibaba slipped under its IPO price 233 days afterits stock market debut while Facebook dipped below itsIPO price in its second day of trading. Facebook is now upnearly 300 percent from its IPO.

Snap's IPO was popular among twenty-something investors,according to Robinhood, a mobile trading app.

It recently traded at nearly 21 times expected revenue,according to Thomson Reuters data. By comparison, Facebook has arevenue multiple of 11.6.

Since May, the interest rate that short sellers pay toborrow shares of Snap has jumped to 42 percent a year, accordingto Astec Analytics. Some insiders in Snap's IPO will be free tosell their shares at the end of July, increasing the supplyavailable to short sellers.

The Advisor Shares Ranger Equity Bear ETF made moneyselling Snap after its IPO and buying the shares back after itsdisappointing quarterly report.

Portfolio manager Brad Lamensdorf said he would considershorting Snap again once more shares hit the market.

Separately, RCom initiated contempt proceedings in the apex court against the Department of Telecommunications, blaming it for delaying a spectrum sale that would have enabled dues to be paid to Ericsson and lenders.